• Saturday, Dec 03, 2022
  • Last Update : 09:54 am

ED: Cracking under pressure

  • Published at 03:16 pm June 13th, 2020

The authorities concerned would do well to reassess their decisions and listen to the experts

The national budget for the 2020-2021 fiscal year -- with a proposed amount of Tk568,000 crore -- has, at least as far as initial reactions go, brought about more questions than answers, from experts and the general people alike.

While eyebrows have rightfully been raised at the proposed revenue collection numbers and growth rate -- which look highly ambitious, to say the least -- there remain other unanswered questions that must also be addressed and resolved.

Among the most pertinent of these questions is the deviation of the current budget from the traditional rule of maintaining a 5% deficit, with the belief that this deficit can be managed through significant borrowing from the banking sector.

This could prove to be a fatal mistake, a sentiment that has been echoed by experts across sectors. It is no surprise that, as far as banking sectors go, Bangladesh has had one that has been struggling for quite some time now. Marred by a lack of credit growth, continuous bad loans, and a whole host of other irregularities, the banking sector has been crying out for help for some time now.

However, instead of reforms and policies in place to strengthen it, this decision to put further strain on such an ailing and vulnerable sector -- particularly at a time when the economy itself is rocked from the effects of the Covid-19 pandemic -- is extremely worrisome and could lead to dire consequences. 

The overall reduction in income across the economy has meant that people are not depositing money into banks and rather are withdrawing. This has meant that the Advanced Deposit Ratio (ADR) will be under pressure.

On top of that, the private sector -- always in need of credit -- will see a further reduction in credit flow, and this is not good news for the Bangladesh economy at all.

Therefore, the authorities concerned would do well to reassess their decisions and listen to the experts about finding alternative solutions to meet the deficit financing target.

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